Winding back the clock to a less prosperous time

Anthony Albanese has missed the point in his rejection of criticism of his government’s reform mettle by former ACTU head Bill Kelty as an indulgence in romanticising the past. Mr Kelty had reportedly told a business luncheon attended by former treasurer Josh Frydenberg and others that the Albanese government was “mired in mediocrity”. In response on Thursday, Mr Albanese listed among his government’s achievements the winding back of the stage three tax cuts. The Prime Minister told ABC radio: “What my government has done is dealt with the present and set us up for the future. That’s been our job. But there’s nothing timid about that.” He listed reform of the NDIS and aged care, and said “there’s nothing timid about intervening into the gas and coal markets to control prices in order to put that downward pressure on energy costs for families and importantly for business, including for manufacturing”.

By and large, the reforms mentioned by Mr Albanese involve tweaking the way in which the government redistributes money it collects from elsewhere. The energy cost boast is incredulous given the failure to deliver the one energy cut that matters politically; that is, lower electricity bills by $275 a year together with an affordable transition towards a promised net zero.

In contrast, the reform challenge tackled by Bob Hawke and Mr Kelty was altogether different and paid decades of dividends towards Australia’s enviable living standards. The changes involved freeing the economy to grow, not cutting up the pie. In an opinion piece in this newspaper on Friday, Mr Kelty reminds us of the dire state of the economy in 1984, which allowed business and government to jointly remodel the compact between labour and capital towards a more flexible workplace, with private health insurance and superannuation as a social trade-off. It should not be easily dismissed as a romantic frolic down memory lane. Mr Kelty has made clear repeatedly that tax reform is the priority for government and a job that is never done. In an interview with industrial relations reporter Ewin Hannan in 2019, following the death of former prime minister Hawke, Mr Kelty said: “You don’t design your tax system for low-paid people. You design your tax system for middle-class Australia.” His prescriptions included cuts to marginal tax rates, progressive increases in the superannuation levy, a new asset class to drive infrastructure investment, six-figure teacher salaries, and changes to the workplace relations system to address stagnating wages and lift productivity.

In his most recent speech, Mr Kelty said people were “not impressed by politicians telling them – or at least implying – that a tax cut has fixed their problem paying bills, especially a tax cut that leaves them paying more tax than they were two years ago”. At the heart of the Hawke/Paul Keating/Kelty reforms was a co-operative relationship between business and government for mutual benefit. Mr Kelty paid tribute to industry greats of the past and present including Sir Peter Abeles, Ted Harris, John Prescott, Gerry Ellis, Will Bailey, Ivan Deveson, Gary Pemberton, Paul Simons, Solomon Lew, Lindsay Fox, Bill Bolitho and Alan Jackson, who were willing to work constructively with the ALP government and unions to restructure the economy.

As former Victorian Liberal Party president Michael Kroger observed on Sky News, Mr Albanese has made enemies not friends. “It is a single-minded achievement to have both business and the unions against you,” he said. Most serious is the fact the lack of ambition by the Albanese government, most notably in workplace flexibility and punishing personal tax rates, risks steering the nation back towards the economic predicament Hawke, Mr Keating and Mr Kelty worked to fix in the early 1980s.